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provide detailed steps to solve this problem, thanks. During 2006, Blass Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 4.55% within 12 months following sale and 5.45% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2006 and 2007 are as follows: Actual Warranty Sales Expenditures 2006 $ 400,000 $18,000 2007 500,000 30,000 At December 31, 2007, Blass should report an estimated warranty liability of a. 21,800 b. 22,750 c. 42,000 d. 90,000 the correct answer is C. 42,000.

provide detailed steps to solve this problem, thanks.

During 2006, Blass Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 4.55% within 12 months following sale and 5.45% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2006 and 2007 are as follows:
Actual Warranty
Sales Expenditures
2006 $ 400,000 $18,000
2007 500,000 30,000
At December 31, 2007, Blass should report an estimated warranty liability of
a. 21,800
b. 22,750
c. 42,000
d. 90,000

the correct answer is C. 42,000.

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